Real Estate Briefing - Archive | October, 2008

From Commercialpropertynews.com: The real estate market in the U.S. is taking a bit of a beating due to the financial crisis, but the property market in neighboring Mexico appears to be escaping any negative consequential effects, according to a Global In-Sights webcast by CB Richard Ellis Inc.

Bolstered by solid economic fundamentals, $75 billion in Central Bank reserves and the absence of a housing crisis, Mexico has been able to maintain a strong real estate market. The office and industrial sectors continue to perform well in major metropolitan areas in Mexico….. Full Article: Source

From Building.co.uk: Three schemes by state-owned developer are behind schedule as reports of a slowdown gather pace. Cracks have started to appear in the Dubai construction market as it emerged several projects by one of the emirate’s biggest developers have been hit by delays.

Three schemes from Dubai Properties, the state-owned firm behind some of the region’s grandest developments, are behind schedule – at least one as a result of market concerns….. Full Article: Source

From Reuters: Morgan Stanley Real Estate Investment GmbH has become the latest manager to suspend redemptions from a German open-ended property fund amid a sharp slide in investor sentiment, the company announced on Thursday.

The Frankfurt-based branch of Morgan Stanley’s $96.3 billion global real estate management business said it had temporarily barred investor exits from its P2 Value Fund, after a flurry of “major, unanticipated withdrawals.”…. Full Article: Source

From Bloomberg: Hypo Real Estate Holding AG, the lender that received a 50 billion-euro ($64.3 billion) bailout from the German government, said it received an additional 15 billion-euro guarantee to cover short-term cash requirements.

The credit line from Soffin, the Financial Markets Stabilization Fund, is funded by the Bundesbank to cover its short-term funding needs following market turmoil, the Munich- based lender said late yesterday in a statement on the DGAP-Adhoc newswire….. Full Article: Source

From Privateequityrealestate.net: The Canada Pension Plan Investment Board is setting aside C$1.4 billion ($1.17 billion; €903 million) to target distressed real estate opportunities in the US and UK. The C$127.7 billion pension fund would invest the money in addition to its existing real estate allocations, worth an estimated C$7.2 billion.

CPPIB is expected to commit the capital to opportunistic real estate funds, such as those run by The Blackstone Group and Morgan Stanley, with Graeme Eadie, senior vice-president of real estate investments, telling local Canadian media direct investment partners might also be considered….. Full Article: Source

From Inman.com: Three recent surveys show continued turmoil in housing and financial markets have many Americans postponing decisions to buy or sell a home, but that they remain optimistic about the near-term prospects of a recovery and still consider a home to be a good investment.

From Dailymail.co.uk: House prices are plunging at the fastest rate since records began in 1952, a shocking report into the crumbling property market revealed today. In just 12 months, the price of the average home has collapsed by around £27,000, a record drop of 14.6 per cent since last October.

The report, from the Nationwide, the building society, said it is the biggest, quickest and most dramatic fall that it has ever witnessed. In a further blow to homeowners, economists warn Britain may be less than halfway through the biggest price plunge in history….. Full Article: Source

From Propertywire.com: A number of real estate agents in South Africa are reporting a sudden increase in activity suggesting that the property market slowdown is bottoming out but it is too early to be over hopeful others are warning.

In particular high interest rates and lenders continuing to tighten their criteria is still making it difficult for purchasers, especially first time buyers, to obtain finance….. Full Article: Source

From Environmental-finance.com: UK commercial property investors are increasingly considering the sustainability of their stock, but few are actually using sustainability information in investment appraisals, according to a survey.

A poll of 300 private and institutional investors in UK commercial and retail property, conducted by property consultant GVA Grimley, showed that more than 90% of investors considered sustainability issues when buying properties – a “modest” increase compared with last year’s survey, the firm said….. Full Article: Source

From Express.co.uk: UK homes have lost nearly 15 per cent of their value since last year following 12 months of tumbling prices. Nationwide’s latest figures revealed housing prices have plunged 14.6 per cent during the year to the end of October.

The mortgage lender said prices fell by a further 1.4 per cent in October, setting a new all-time low for its house price index….. Full Article: Source

From Thenational.ae: In a bid to revive trading activity and curb falling property prices in secondary markets, major developers are offering relaxed payment plans and reduced fees on transactions, sources said.

Following last week’s warning by the Central Bank governor Sultan Nasser al Suweidi of a possible correction in property prices and increasing concerns that developers will struggle to secure financing for existing and future projects, developers including Emaar and Nakheel have relaxed the conditions for new and current owners….. Full Article: Source

U.S. new home prices are now down 17%, new home sales have been reduced by 57% and new property listings are down by 27% since the real estate market’s historic peak set in March of 2007.

This marks the worst residential real estate bear market in price decline and duration since 1945. While this is humbling news to millions of homeowners nationwide, not
everyone is feeling the pain to the same degree….. Full Press Release: Source

From Bi-me.com: Abu Dhabi, the richest city in the world, has seen its gross domestic product (GDP) soar from US$40.6 billion in 2002 to US$108.9 billion in 2007 (rising more than 8% per annum).

The booming real estate and tourism sectors are playing a significant part in this success story as the total value of announced projects in the capital inches towards the US$500 billion mark (AED 1.83 trillion)….. Full Article: Source

In a recent survey of 320 high net worth individuals (HNWIs), Hotbed revealed that 67 per cent of those surveyed felt that now was a good time to increase their investments in unquoted companies or commercial property. Only 13 per cent disagreed….. Full Article: Source

From Independent.ie: Peter Straarup, the chief executive of National Irish Bank’s parent Danske Bank, has told analysts that the Irish commercial market is “frozen” and that collateral on some development projects have fallen as much as 80pc in value.

Irish banking analysts believe Mr Straarup was referring to development land at the extreme end of asset declines. They cautioned that it is nearly impossible to give realistic valuations when there are few deals taking place….. Full Article: Source

Europe and Asia saw slight gains in market capitalization amid a global market constrained by the credit crunch, according to Ernst & Young’s third annual Global Real Estate Investment Trust (REIT) report released today. The total market capitalization of publicly-listed REITs around the world reached nearly US$605 billion, as of 30 June 2008, down from US$764 billion a year earlier.

“Like every other sector of the real estate market, publicly-listed companies have been hit very hard by the global credit freeze. It remains to be seen when REIT markets will stabilize,” says Michael Frankel, Global Director of REIT Services for Ernst & Young. REITs in Asia have been the best performers for the 12-month period ending June 2008 in terms of one- and three-year returns. With China planning to launch a pilot REIT program next year, there is likely to be renewed interest in the public REIT sector in Asia….. Full Press Release: Source

From Thestar.com.my: Malaysia should promote “property” tourism to bring in foreign direct investment that would benefit not only the economy but also the retail industry.

International Real Estate Federation (FIABCI) Malaysia president Datuk Richard Fong said some real estate agencies in Penang had started to bring in groups of foreign tourists under a “property” tourism package that included visits to property launches and show houses….. Full Article: Source

From Telegraph: Buying and selling property in a plummeting market is not for the faint-hearted. With the market in the doldrums, sales more than 90 per cent down on last autumn and the entire property industry looking as if it might seize up altogether, buyers hold all the cards. Surely it’s just a question of making an offer?

But after a decade of stupidly steep house price growth, the downturn has stunned buyers as well as sellers. “What makes a good buyer? Right now it’s probably having a pulse,” quips Lindsay Cuthill, director of Savills’ Fulham office….. Full Article: Source

From Dailystar.com.lb: Economists and real-estate brokers predicted on Thursday a drop or at least a freeze in the prices of properties in Lebanon due to the global credit crunch, a fall in the prices of building materials and an expected reduction in remittances from Lebanese expatriates working in the Gulf Arab states.

“Naturally the prices of properties will either drop or stop growing. Apart from the economic situation in the Gulf states, the cost of building materials have fallen,” Ghassan Diebah, a professor of economic and finance at the Lebanese American University said….. Full Article: Source

From Ameinfo.com: Dubai’s property market is currently beset by conflicting rumours, with analysts predicting a slow down or correction in the emirate’s real estate prices and the municipal bodies and developers dismissing these fears as exaggerations.

Land deals in Dubai this year are expected to hit the Dhs300bn mark, according to the Director-General of the city’s Land Department Sultan Butti bin Mijrin, almost double the 2007 total….. Full Article: Source

From Businessweek.com: Rates on 30-year mortgages spiked this week as the tumult in financial markets continued to be felt in housing finance. Mortgage giant Freddie Mac reported Thursday that 30-year, fixed-rate mortgages averaged 6.46 percent this week, up from 6.04 percent last week.

The sharp increase pushed 30-year rates to the highest level since the week of Oct. 16. Rates on 30-year mortgages hit a high for the year of 6.63 percent in late July and then dropped to a seven-month low of 5.78 percent the week of Sept. 18….. Full Article: Source

From IPE: Teacher Retirement System of Texas has approved a €200m commitment to the Blackstone Real Estate Partners Europe III commingled fund.

It is understood officials believe Blackstone has a proven track record of investing capital in Europe, given the company had a presence in this market since 2001 and the real estate manager’s prior funds are on target to provide an investor-level aggregate IRR of 43.6% against an equity multiple of over 2x….. Full Article: Source

From Financialpost.com: House prices are going to go up next year, albeit by a mere $200, according to Canada Mortgage and Housing Corp. The Crown corporation warned that some moderation can be expected in the once red-hot housing sector for the rest of this year and into 2009.

The forecast comes as house prices have been falling nationally, according to the Canadian Real Estate Association. Canada’s largest housing markets have experienced prices declines from a year ago for four straight months, with each percentage drop bigger than the next….. Full Article: Source

From Portugalresident.com: The property market in the future must be associated with sustainable development, socially responsible pricing and the environment.

These were the conclusions of the Salão Imobiliário de Lisboa 2008 (SIL), Lisbon’s annual property fair, which ran until October 26 at the Feira Internacional de Lisboa (FIL) at Parque das Nações. This year’s fair counted on 300 exhibitors spread out over three exhibition halls and an estimated 33,000 professional visitors….. Full Article: Source

From Homesworldwide.co.uk: Country offers investors an affordable entry point and being outside the Euro zone it is an attractive emerging real estate market. A prime winter sun destination due to its location Egypt has year-round appeal for tourists, and with low property prices it also provides an affordable entry point for overseas property investors.

The World Travel and Tourism Council (WTTC) expects the travel and tourism economy in the country to grow by around 5.5 per cent in 2008, and due to its strong economy, stable political system and stable currency Egypt is seeing an increasing amount of property investors this year as well….. Full Article: Source

Offiicial at Progress, which had €587m worth of real estate investments at the end of 2007, said market conditions mean the fund is no longer big enough to invest in direct real estate….. Full Article: Source

From CNN: The government is expected to announce soon that it will devote up to $50 billion to directly address the source of the financial crisis: bad mortgages and millions of homeowners at risk of foreclosure.

White House spokesman Tony Fratto said on Thursday that “no decisions” have been made on “a number of housing proposals” that the administration has been reviewing “for some time.”…. Full Article: Source

From Gulfnews.com: In the cold war days, lavish dachas (villas) just outside Moscow were the exclusive preserve of the Politburo with the rest of the population squeezed into small, decrepit and drab government-owned apartment complexes.

That has changed dramatically since glasnost (1991) and Moscow is one of the rare booming markets worldwide and offers a wide range of luxury properties….. Full Article: Source

From Zawya.com: Prices in the UAE property market surged in September with Dubai registering 17 per cent increase month-on-month and 11 per cent in Abu Dhabi, compared to an average of two to three per cent during the summer months, according to a new report.

“Price growth is picking up again after a brief moderation during the summer. However, while prices remain on an upward spiral, rental rates in Dubai seem to be stabilising, thereby compressing rental yields. This shows we have reached a level where affordability is getting breached,” HSBC said in a report released recently on the UAE real estate market….. Full Article: Source

From Homesoverseas.co.uk: A 16th century villa located just outside the Tuscan town of Cortona has been placed on the market for the first time in 500 years at an asking price of €8m (£6.3m). Villa Fontana was once a hangout for the Knights of Saint Stephen and a Grand Master of the Knights of Malta, not to mention the German army during World War II.

The villa features 16 bedrooms, 10 bathrooms, six reception rooms and a nifty lookout tower with lake views, terracotta floors and frescoed ceilings help provide that old world ambiance….. Full Article: Source

From IPE: Santa Barbara County Employees’ Retirement Association is looking at expanding into international real estate for the first time.

RREEF and CB Richard Ellis Investors – its domestic real estate managers - gave a presentation on international real estate to the board of directors last week, according to Tom Ford, retirement administrator on an interim basis for Santa Barbara County, and its detail caught the attention of officials….. Full Article: Source

From Nasdaq.com: The real estate investment trust (REIT) industry will survive the credit crunch, with investors coming back to the market over the next twelve months, despite recent falls in stock prices, according to consultancy Ernst & Young.

A global markets REIT report, which analyzed REIT markets in 16 major countries where REITs are publicly-listed, revealed that investors are now fully factoring risk into the pricing of REITs, and hence, if the market fundamentals can be sustained, REITs now potentially offer good value for money….. Full Article: Source

From IPE: Apollo Real Estate Advisors, the global firm with $11.6bn of equity commitments to investments worldwide, is changing its name to AREA Property Partners from the beginning of next year.

AREA Property Partners said the rebrand will have no effect on its management, financial resources, investing focus nor on its business operations as the firm plans to keep its global headquarters in New York City and its European headquarters in London’s Knightsbridge….. Full Article: Source

From Privateequityrealestate.net: The Blackstone Group expects to close its latest European real estate fund early next year, according to a managing director at the firm.

Douglas Kirkman said that Blackstone expected to hold a final close of the vehicle in January during a panel discussion at the IMN European Real Estate Opportunity & Private Fund Investing Forum in London today. A spokesman for Blackstone declined to comment….. Full Article: Source

From Forbes: If you’re a homeowner seeing property values plummet, look to the commercial real estate market for solace. It might tell you which areas will recover fastest–and which will likely remain weak.

The Urban Land Institute recently asked 700 real estate professionals to name the best (and worst) places to invest in commercial real estate in the coming year. Those surveyed included private developers, Realtors and Real Estate Investment Trust executives. …. Full Article: Source

From Telegraph: According to Cushman & Wakefield, the onset of the banking crisis has pushed up prime yields, which measure the value of a property in terms of its rental income, by 47 basis points since the start of September to 6.49pc – the highest for 15 years.

The market has all but frozen because of the lack of debt and investors re-evaluating the premium they want before spending their cash, the report said, adding that the UK commercial property market remains at the “front line” of the financial crisis. …. Full Article: Source

From BBC: UK house prices continued falling in October and are now nearly 15% lower than a year ago, says the Nationwide. The building society’s latest survey says property prices fell by 1.4% this past month, pushing the annual rate of fall up from 12.4% to 14.6%.

This means the price of an average house was £158,872 - nearly £30,000 less than a year ago. …. Full Article: Source

From WSJ: German property financier Hypo Real Estate Holding AG said early Wednesday it has applied for a guarantee by the German government’s €500 billion ($635 billion) rescue fund to back up short-term liquidity needs, as a €50 billion bailout plan agreed in October is being finalized.

The guarantee, which the company requests for a €15 billion liquidity line provided by the German central bank, or Deutsche Bundesbank, aims to cover short-term liquidity requirements before the agreed €50 billion rescue package involving bank loans and a state guarantee becomes “fully available by mid-November,” the company said. …. Full Article: Source

From Zawya.com: The first stage of new green building regulations due to be handed over to Dubai’s Executive Council next January 1 is set to lead the world in sustainability, industry experts say.

“In green building what we are attempting to do will be the first in the world. To have regulations that look into all the environmental elements and be mandated, it’s never been done,” Adi Afaneh, senior environmental planner, planning department at Dubai Municipality said. There are currently around 252 international green systems worldwide. …. Full Article: Source

From Inman.com: Countries often develop their arrogance from their great cities; thanks to Paris, the French exhibit a sense of specialism about their special place on the planet.

The French authenticity is difficult to challenge — the bread, the wine, the architecture and the fashion to name a few distinctions. However, the country is often just downright different. …. Full Article: Source

From Independent: Mortgage lending slumped to its lowest level for more than three and a half years during September as the stagnant housing market stifled demand, figures showed today.

A total of £17.7 billion was advanced during the month, 10 per cent less than during August and 42 per cent below the level for September last year, according to the Council of Mortgage Lenders. …. Full Article: Source

From FT: Homeowners in some of central London’s wealthiest areas are now feeling the full effect of the decline in property prices, data published by the Land Registry yesterday showed.

In September, house prices in Kensington and Chelsea - which had been steadily rising at an annualised rate of 33.5 per cent a year ago - fell by 2 per cent, having fallen by 1.1 per cent the previous month. …. Full Article: Source

From Allafrica.com: The United States (US) ambassador to Angola, Dan Mozena, Tuesday in Luanda reiterated his country’s availability to assist Angola in building of the best houses to cater for population.

The US diplomat said this at the end of a meeting held with Urbanisation and Housing minister, Sita José. According to him, the US private and public sectors can, greatly, assist Angola in this “huge task of real estate sector”. …. Full Article: Source

From Indiatimes.com: With a slump in the Indian real estate sector due to excessive credit crunch and demand slowdown, home buyers can expect a further correction in real estate prices in the range of 15-20% in next six months. There are several factors working against the Indian real estate sector that can bring about such a price correction.

With the Reserve Bank of India (RBI) tightening money supply and increasing interest rates to fight inflation, the developers are facing liquidity crunch. Banks are getting jittery over loan disbursals to real estate developers. Even if the developers manage to get loans from banks, they are hardpressed to keep more collateral with the banks. …. Full Article: Source

From Birminghampost.net: Leading agency King Sturge has warned liability to pay full rates on empty buildings could tempt landlords to offer cut price deals and damage an already uncertain market.

The company believes landlords taking this action could spark widespread “stand-offs” between themselves and tenants as a direct result of the new legislation. In April, the government scrapped rate relief on empty commercial and industrial properties such as warehouses and offices. …. Full Article: Source

From News.com.au: Research by CB Richard Ellis analyst Kevin Stanley shows sales reached only $5.6 billion in the first three quarters of 2008, compared with $12 billion last year. Mr Stanley said the Australia-wide results were consistent with global trends.

“Investment activity has slowed due to uncertainty about how far prices may yet fall and a lack of debt available for larger transactions,” he said. …. Full Article: Source

From Homesoverseas.co.uk: Property auctioneers in South Africa report that there has been a marked improvement in investor sentiment over the past couple of weeks following the Reserve Bank’s decision not to raise interest rates, with buyers packing into residential property auctions.

Rael Levitt, CEO of The Alliance Group, says trading on the group’s auction floors this month throughout the country has seen the strongest investor appetite in more than a year. …. Full Article: Source

From WSJ: More real-estate investment trusts are expected to sacrifice their dividends as broader market turmoil drains their liquidity and hinders debt refinancing.

LaSalle Hotel Properties said last week that it cut its annual dividend by 51% to provide $100 million in liquidity over the next 26 months. The hotel REIT, whose shares have fallen more than 70% so far this year, is considered to be in the vanguard. …. Full Article: Source b